Labor talking to states over mining tax tweaks

The Government says it is continuing to negotiate with the states over possible changes to how mining royalties are dealt with under the Commonwealth's minerals resource rent tax (MRRT).

The Coalition has used Question Time to again attack the policy, following last Friday's revelations the tax raised just $126 million in its first six months.

The Government's most recent forecast for the tax was that it would collect $2 billion this financial year.

Labor is coming under increasing pressure from the Greens and independent MPs, as well as some of its own MPs, to redesign the tax and remove the provision to refund state royalty charges to mining companies.

Opposition Leader Tony Abbott asked the Prime Minister whether she would rule out further changes to the tax.

Julia Gillard responded: "We have been concerned about increases in these inefficient taxes, and we've asked the GST Distribution Review to look at the matter.

"We've received their conclusions, and they are that the current treatment of royalties under the MRRT is both unsustainable and undesirable.

"So we've said that through the heads of Treasury process, we would work on that with state counterparts in coming months."

Treasurer Wayne Swan has blamed a "dramatic collapse" in commodity prices for the revenue shortfall from the tax.

"We will look at the performance of this tax in light of prices in the normal way by our Treasury and of course by the tax department," he said.

When the Government handed down last year's budget, it promised to "spread the benefits of the boom" by using MRRT revenue to pay for increased family payments and higher superannuation contributions.

Liberal backbencher Tony Smith today used Question Time to ridicule that idea.

"Can the Treasurer confirm that when he stated he would spread the benefits of the mining boom, he really meant $5.50 for every Australian?" he asked, holding up some loose change.